I'm trying to determine if I should add money to a high yield preferred whose call date is on 9/29/14. The preferred stock is Santander's E series with a coupon rate of 10.5%. It currently sells for $26.70 and yields about 9.8%. I know a preferred or bond may not be called on the call date; it of course depends upon whether it is in the company's interest. In this case, 10.5% is a very high rate and Santander, whose situation appears to be improving, may want to retire this series and reissue a new series at a much lower coupon.

Their next dividend is payable on 3/31/14. Should I assume there are, therefore, three more dividends coming if it is called on 9/29/14?

Thanks, pauleckler. I already have a position in this preferred and they have been good about paying their dividends. For me, the dumb question was whether the call date usually coincides with a final dividend payment or not. It struck me that the call date was a couple of days shy of when you'd expect the third quarterly payment to occur, so I was concerned whether that third payment would occur or not.

Now, assuming a third payment, I can calculate whether the high dividend is high enough to compensate for a possible redemption of all shares at $25. Perhaps the market has already brought down the price to what's still profitable.

In your experience, if a company is going to call preferred shares, how far in advance is it announced or is it announced at all? Do companies that wish to redeem preferred shares simply do so once the call date passes without any press release?

As Santander is not a US company, I don't know how relative my experience is. However, with US companies, preannouncements can be elusive. Sometimes they make the news. Other times all you get is a notice from your broker. And even that sometimes lacks details.

Usually when they call an issue, US companies do pay the "interest" accrued since the last payment.

Let me see if I have this right. You expect to get 3 more dividends of $.6563, or $1.97, and the preferred is selling at $1.70 over par, which suggests that it will get called at the end of Sept. So we're talking about a net of $.27 on an investment of $26.70 (i.e., approx 1%) in a somewhat risky, probably fairly illiquid preferred.

Because it also may not be called. Keep in mind that Europe in general and Spain in particular are in a bad way, so a September call is not a foregone conclusion. At the same time, Santander has been reliable about paying dividends on my current position, so at least I know that three payments are coming.